Core Viewpoint - The Federal Reserve is unlikely to cut interest rates in the near term, with a consensus among experts that rates will remain steady in upcoming meetings due to mixed economic signals and ongoing inflation concerns [1][2][5]. Economic Indicators - The US economy grew at an annualized rate of 4.4% in Q3 2025, the fastest pace in two years, driven by strong consumer spending, although the labor market showed weakness with fewer jobs added in December than expected [4]. - Inflation decreased to 2.7% in December from 2.9% a year ago, but remains above the Fed's target of 2% [4]. Federal Reserve's Position - Most Fed members prefer to wait for more economic data before making decisions on interest rates, particularly regarding inflation and labor markets [2]. - The Fed is balancing the need to cool inflation without increasing unemployment, complicating the decision-making process [3]. Future Rate Predictions - Bank of America predicts potential rate cuts in June and July 2026, while Goldman Sachs also anticipates two cuts of 25 basis points during the same period [6]. - J.P. Morgan Global expects the Fed to maintain current rates for the rest of the year, with a possible hike in Q3 2027 if the labor market strengthens [6]. Housing Market Insights - The average rate on a 30-year fixed mortgage fell to 6.06%, the lowest since September 2022, which could improve housing affordability if the Fed cuts rates later [7]. - However, mortgage rates are influenced by the 10-year Treasury yield, which is expected to remain stable despite potential Fed cuts [8]. Market Reactions - Historically, the second year of a rate-cut cycle has been positive for stocks, with the S&P 500 averaging a 6.2% increase during such periods [10]. - Existing bonds become more attractive when rates are cut, as lower borrowing costs can stimulate economic activity [11]. Bond Market Dynamics - The US Treasury market faced a selloff due to geopolitical tensions but stabilized after threats of a trade war diminished [12].

ANGELA WEISS/AFP via Getty Images 2025 may have been the start of the end of America's outperformance, a strategist says. Lazard's Ron Temple pointed to concerns about the Fed's credibility and the US debt pile. Investors may start to shift away from the US dollar first in currency hedges, he said. This year might be remembered as the end of a distinct era in markets. Lazard's top strategist said said he believes 2025 marked the beginning of the end of American exceptionalism in financial markets ...

Market Overview - US stocks opened with muted performance as a holiday-shortened week concluded, with the Nasdaq Composite leading slightly upward by around 0.4% and both the S&P 500 and Dow Jones Industrial Average rising by more than 0.2% [1] - The CME Group restored operations after a significant outage that disrupted trading in futures and options across various markets, including US Treasurys and crude oil, which lasted until 8:30 a.m. ET [2] Recent Trends - Stocks have rebounded sharply this week as traders increased bets on a potential interest rate cut by the Federal Reserve in December, with renewed confidence in AI driving tech stocks [3] - However, Wall Street indexes are facing a losing month, primarily due to a sharp cooldown in megacap tech stocks, leading to a reassessment of how quickly AI-driven businesses can achieve sustainable profits [4] Future Predictions - As November concludes, analysts are providing stock market predictions for the upcoming year, with Deutsche Bank setting a target for the S&P 500 at 8,000 by the end of 2026, while HSBC and JPMorgan expect it to hover around 7,500 [5]

Core Insights - The recent market dynamics have been labeled as the "debasement trade," driven by concerns over budget deficits, high inflation, and the declining dominance of the US dollar [2][5]. Group 1: Market Dynamics - Investors are increasingly purchasing hard assets such as gold, silver, and cryptocurrencies, which are perceived as beneficiaries of a weakening dollar and persistent inflation [3]. - The selling side of the debasement trade includes a decline in currencies and government debt, particularly noted in Japan with the yen and sovereign bonds selling off due to political changes [4]. - Central bank stimulus globally is reinforcing the debasement narrative, as low interest rates and money printing raise inflation concerns [5]. Group 2: Inflation and Interest Rates - Rising inflation may lead to rate hikes, which could heighten concerns over sovereign debt, although the sell side of the debasement trade is not as pronounced in the US, where Treasurys have been rallying [6].

Group 1 - Foreign holdings of US Treasurys reached a record high of $9.159 trillion in July, marking a nearly 9% increase year-over-year [1] - Japan's Treasury holdings increased to $1.151 trillion, the highest since March 2024, making it the largest non-US holder of Treasurys [3] - UK investors raised their Treasury holdings to just under $900 billion, reflecting a 5% increase from June [4] Group 2 - China's Treasury holdings fell to $730.7 billion, the lowest level since December 2008, indicating a strategic shift away from reliance on the US dollar [2] - The reduction in China's Treasury holdings has been gradual over the past decade, influenced by both strategic and market factors [2] - Foreign investors sold $16.3 billion in US equities in July, following significant inflows of $163.1 billion in June [5]

Core Points - US stock futures increased following the Senate's confirmation of Stephen Miran as a Federal Reserve board governor, coinciding with a record-setting day on Wall Street [1][2] - The Senate confirmed Miran with a narrow 48-47 vote, positioning him to influence interest rate decisions during the upcoming Federal Reserve policy meeting [2] - Miran's intention to take a leave of absence from his White House advisor role raises concerns about the independence of the Federal Reserve, especially amid President Trump's efforts to dismiss Fed governor Lisa Cook [3] Market Reactions - The S&P 500 and Nasdaq Composite reached new highs during day trading, driven by positive sentiment from ongoing US-China trade talks and expectations of a Federal Reserve rate cut [4] - The Federal Reserve's upcoming decision on interest rates is the main event of the week, with traders anticipating a 96% chance of a 25 basis-point cut due to labor market slowdowns [5] Economic Indicators - Investors are awaiting retail sales figures to gauge consumer performance amid persistent inflation and a fluctuating labor market [4] - The anticipation of a Federal Reserve rate cut has led to a bullish outlook in the bond market, with US Treasurys outperforming global peers [6]